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Resource Allocation Based on Efficiency Analysis

Author

Listed:
  • Pekka Korhonen

    (Helsinki School of Economics, P.O. Box 1210, 00101 Helsinki, Finland)

  • Mikko Syrjänen

    (Helsinki School of Economics, P.O. Box 1210, 00101 Helsinki, Finland)

Abstract

The purpose of this paper is to develop an approach to a resource-allocation problem that typically appears in organizations with a centralized decision-making environment, for example, supermarket chains, banks, and universities. The central unit is assumed to be interested in maximizing the total amount of outputs produced by the individual units by allocating available resources to them. We will develop an interactive formal approach based on data envelopment analysis (DEA) and multiple-objective linear programming (MOLP) to find the most preferred allocation plan. The units are assumed to be able to modify their production in the current production possibility set within certain assumptions. Various assumptions are considered concerning returns to scale and the ability of each unit to modify its production plan. Numerical examples are used to illustrate the approach.

Suggested Citation

  • Pekka Korhonen & Mikko Syrjänen, 2004. "Resource Allocation Based on Efficiency Analysis," Management Science, INFORMS, vol. 50(8), pages 1134-1144, August.
    • Handle: RePEc:inm:ormnsc:v:50:y:2004:i:8:p:1134-1144
    DOI: 10.1287/mnsc.1040.0244
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    References listed on IDEAS

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